Governor calls for common sense reforms to transportation funding

Governor Patrick yesterday unveiled his long-anticipated plan to invest in the state’s aging transportation system. There weren’t any major surprises in the projects, but the announcement is sure to breathe life into some initiatives around the state:

The plan, which is priced at over $1 billion per year for the next 10 years, would also fund maintenance and operations for transportation systems throughout the state.

But the real news out of this plan is the variety of new funding options the Governor put on the table. Progressive ideas from a vehicle miles traveled (VMT) tax to a “green” fee would help align transportation costs with use and wear. Transportation planners have been recommending these and other incentive-based ideas for years but few states have taken steps in this direction.

Much has been made of these “new” taxes, so it’s worth breaking them down.

Payroll, Income, and Sales Taxes – increasing taxes on economic productivity for the state is a standard method to fund public investment. Presumably these taxes will generate benefits for businesses and residents in the state.

Gas Tax – the 21-cent gas tax has not been raised since 1991. The value of this tax has depreciated 40% since then. This is a no-brainer.

“Green” Fee – this annual tax will charge people who drive polluting vehicles more. This is rational economics. These vehicles cost our state more every year and we should disincentivize them. We do this with negative externalities all the time, from taxes on cigarettes to penalties for polluting factories.

VMT Taxes and Tolls – even the most ardent conservative should support this idea: charge people for the infrastructure they use. Transit riders pay to ride transit. So do air travelers. It is completely reasonable to ask the same of drivers.

The Governor will identify his preferences among these options on Wednesday. It’s likely that he’s floating some of the more extreme options (VMT taxes) to pave the way for the ones he really needs (new tolls). But we will have to wait and see.